House and Senate leaders on Tuesday "struggled" to reach an agreement on a proposal to finance the reversal of a Medicare physician reimbursement reduction scheduled to take effect on Jan. 1, 2007, CQ HealthBeat reports (Reichard, CQ HealthBeat, 12/5). Medicare physician reimbursements will decrease by 5.1% without congressional action during the lame-duck session, which likely will end this week (Kaiser Daily Health Policy Report, 12/5). According to CQ HealthBeat, a Senate aide indicated that a "major" disagreement between House and Senate leaders involved a proposal to use a "much bigger physician payment cut in 2008" to finance the reversal of the reduction in 2007. House Ways and Means Committee Chair Bill Thomas (R-Calif.) has proposed a Medicare physician reimbursement reduction of at least 10% in 2008 to finance the reversal of the reduction in 2007, but Senate Finance Committee Chair Chuck Grassley (R-Iowa) and ranking member Max Baucus (D-Mont.) oppose the proposal, according to the Senate aide. Senate Budget Committee Chair Judd Gregg (R-N.H.), who also opposes the proposal, said, "Things like that are just accounting gimmicks" (CQ HealthBeat, 12/5). Baucus said that he and other lawmakers "are looking closely, aggressively" at a proposal to eliminate a stabilization fund established under the 2003 Medicare law to encourage health insurers to offer prescription drug plans in underserved areas to help finance the reversal of the physician reimbursement reduction. Elimination of the stabilization fund would offset an estimated $5.8 billion of the $10.5 billion cost over five years of the reversal of the Medicare physician reimbursement reduction (Vaughan/Johnson, CongressDaily, 12/6).

Other Disagreements
House and Senate leaders also disagree on whether to attach other health care provisions to legislation that would reverse the Medicare physician reimbursement reduction. The House on Tuesday "appeared ready to move" on a bill that would only reverse the Medicare physician reimbursement reduction, "while the Senate was putting together an $18 billion take-it-or-leave-it offer that would ... also provide for increased payments to rural doctors, hospitals and home care agencies," according to a lobbyist, CQ HealthBeat reports. The Senate bill also would provide Medicaid funds for individuals who leave welfare and would reverse a scheduled reduction in Medicare rehabilitation services reimbursements. The House and Senate likely will finalize legislation that would reverse the Medicare physician reimbursement reduction on Wednesday, CQ HealthBeat reports (CQ HealthBeat, 12/5). However, passage in Senate, which likely will include the legislation in larger tax bill, "is far from assured," CongressDaily reports (CongressDaily, 12/6).

Military Construction-VA Appropriations Bill
In other congressional news, an effort by Senate Majority Leader Bill Frist (R-Tenn.) to pass the fiscal year 2007 Military Construction-VA appropriations bill "fizzled" on Tuesday after appropriators failed to reach an agreement on the legislation, Roll Call reports (Pierce/Stanton, Roll Call, 12/6). Sens. Jim DeMint (R-S.C.), Tom Coburn (R-Okla.) and Jeff Sessions (R-Ala.) have blocked a conference committee on the Military Construction-VA appropriations bill because of concerns that some lawmakers would use the legislation to pass an omnibus bill with a number of earmarks ( Kaiser Daily Health Policy Report, 12/5). Frist on Monday agreed to a series of demands by conservative Republican lawmakers to make approval of the Military Construction-VA appropriations bill more likely, but "appropriators said they could not reconcile the House and Senate versions in time to pass the bill along with" a continuing resolution to fund operations for most other federal agencies until early next year. Jenny Manley, a spokesperson for Senate Appropriations Committee Chair Thad Cochran (R-Miss.), said, "We're not saying no to the deal. We're just saying it's unreasonable to think there's enough time to do it. You can't conference a bill in three days. It's a nice gesture. But it's just too late" (Roll Call, 12/6).